Budget Group To Slash 1,000 Jobs

The Car-rental Company Also Said It Will Close Or Sell Its Used-car Lots As It Tries To Trim Costs By $100 Million A Year.

January 5, 2000|By Todd Pack of The Sentinel Staff

Budget Group Inc., which has raced into a multitude of side businesses in recent years, announced Tuesday that it will cut 1,000 jobs and is backing out of the used-car business as part of a plan to save money.

The company, based in Daytona Beach, wouldn't say Tuesday night whether any of those jobs are in Central Florida.

Budget has only about 20 employees at its Daytona Beach headquarters, including chairman and chief executive Sandy Miller. Company President David Siegel works out of Budget's corporate offices in the Chicago suburb of Lisle, Ill. They couldn't be reached for comment Tuesday night.

In a statement, Budget said it would close or sell its company-owned car lots. It will, however, continue to license its name to other car dealers. Budget recently transferred seven of its 19 company-owned used-car lots to a joint venture operated with an unidentified partner or partners, sold three others and closed one.

- Close the Indianapolis headquarters of Premier Car Rental, which caters to the insurance industry. Budget will now handle Premier's operations out of its Lisle office and Orlando support center. It also will extend the Budget brand name to 99 Premium locations and close 39 unprofitable or unnecessary locations in the first quarter.

- Move its Denver-based Ryder TRS truck-rental business to Lisle by year's end.

- Expand European operations, adding 150 locations in Germany. It began operations in Germany in October.

- Sell remaining noncore assets to focus on its car- and truck-rental business. The company didn't offer specifics, but it has recently ventured into areas such as storage units and RV sales and rentals.

The actions are part of a restructuring effort to cut costs by $100 million a year. Budget expects to take a one-time charge of $90 million to $95 million before taxes. It expects fourth-quarter profits before the charge to be in line with analysts' forecasts.

Analysts predicted a loss of about 45 cents a share, according to First Call/Thomson Financial, which tracks earnings estimates.

Budget hinted at the cutbacks in October but didn't say which side businesses it planned to sell. Budget showed a 39 percent drop in profits in the third quarter, from $61.3 million in 1998 to $37.3 million.

Budget's stock closed at $8.94 a share, down 48 cents on the New York Stock Exchange.